With the real estate investment world at a true inflection point, I am honoured to be joining SREF as Principal Advisor for Global Investment and lead the forum’s initiatives around capital flows, financial regulation, portfolio strategy, and fund, transaction, and risk management.

Whether we like it or not, this industry is in for an eventful next chapter, and in such an environment, the innovations and best practices borne through knowledge sharing are critical to both creating value and ensuring stability for everyone involved.

ILPs’ views on real estate as part of their wider portfolios have evolved significantly in recent years: an investment strategy is no longer so simple as acquiring a standing income-generating asset, assuming rental growth roughly in line with inflation, and exiting in five to seven years.

Now, there is a greater understanding of real estate as being highly dynamic, with the potential to unlock much more value but with the caveats of increased risk—operational, physical, financial, and legal. As such, a successful investment strategy requires both the cultivation of in-house subject matter expertise and strong relationships with managers.

Working in distribution, I spend an enormous amount of my time talking to people across the value chain, and a theme that surfaces constantly is the increased cost of managing these heightened risks, which invariably eats into the returns.

How is it possible to create and manage a real assets portfolio that is simultaneously sustainable, resilient, legally and regulatorily compliant, has a positive social impact, and produces sufficient returns such that investors and managers fulfil their fiduciary duties? It is valid question without an easy answer, but this is a fundamentally innovative industry, and it isn’t impossible.

I began my career in finance as a mortgage-backed securities trader in San Francisco five years after Lehman Brothers went bankrupt and threw the global economy into chaos (which I was assured would only happen once in my lifetime).

By that time, Dodd-Frank reform had been implemented in the US, along with equivalent legislation in the EU, Canada, Australia, Hong Kong, Japan, and Switzerland, and, working at a debt originator, the increased cost of compliance was a constant topic of discussion. The result was indeed a fundamental change to the business model and the profitability, as my pre-financial crisis colleagues constantly told me.

Real estate, however, is a very different asset class to fixed income. Because real estate as an investment has become so much more dynamic, we have an increasing number of levers we can pull to create and maintain value, and it isn’t a zero-sum game.

Sustainability is now inherently linked to better financial returns and reduced risk: the large corporates paying top market rents require the real estate they occupy to align with their internal net zero targets, there is significantly more capital available both to finance and to acquire “green” assets, and increasingly sophisticated data collection and monitoring mechanisms allow for greater efficiency in managing portfolios.

In the context of this evolution of the real estate investment, SREF’s mission to facilitate discussion and share knowledge is a particularly timely one, and I look forward to working with all our members as we as an industry navigate an increasingly complex landscape.  The forum, at its core, seeks to legitimise and publicise good ideas, and this will be vital in continuing to attract global capital to the real estate sector.